The Wall Street bank reported earnings of $753 million, or 39 cents per share, applicable to common shareholders compared with a loss of $1.75 billion, or 91 cents per share, a year earlier. Excluding an accounting adjustment, the bank earned 43 cents per share.

Revenue for the quarter came in at $7.7 billion.

Wall Street forecast Morgan Stanley would deliver 33 cents a share in adjusted earnings and revenue of $7.59 billion, according to a consensus estimate from Thomson Reuters.

Morgan Stanley's total non-interest costs fell 41 percent in the quarter as the bank slashed headcount in its trading business.

"We enter 2016 with a continued focus on managing expenses across the firm and driving up returns for our shareholders," Chief Executive James Gorman said in a statement.